Inflexible contracts mean that businesses should now seek "transformational deals" from their end-user workplace services (EUWS) providers through 2008, says a leading analyst

Research by technology and business process outsourcing analyst NelsonHall finds that EUWS is now a "fairly mature market" in the US and Western Europe, with "widespread buy-side [customer] interest" in remote management, offsite support and self-help portals.

The findings are within NelsonHall's latest global research paper, Assessing The End User Workplace Services Market The strongest service growth in EUWS will come from network-centric or unified communications-based services, which will grow from four percent of the overall EUWS market in 2007 to 20 percent by 2012.

However, customers should use their negotiating muscle the secure better deals, advised Dr. Katy Ring, Information technology outsourcing (ITO) research manager at NelsonHall. She said, "Most of the current installed base for end-user workplace services has in place inflexible contracts that are not well-suited for the changing workplace policies of buy-side organizations or for remote services delivery.

"The global device estate for end-user workplace services is changing in terms of requirements for the way functionality is accessed by devices. Because of the technology and workplace policy changes happening in the EUWS domain within organizations, there are benefits to seeking outsourced transformational deals in 2008 and beyond.

"Key challenges for the development of the EUWS market are moving end-users away from reliance on on-site support, negotiating new pricing models, and developing flexible contract structures," continued Ring.

"In the traditional EUWS model, a significant proportion of on-site support and/or local field services personnel are required. This is the main cost component that is reduced with a virtualised service delivery capability."

On average, the field services component can contribute 40-50% of the total cost of the traditional EUWS contract, said Ring. "This cost is not eradicated by a virtualized model but it can be reduced by 30% so that it comprises around 15 - 20% of total costs."

The mature market for outsourced EUWS means that many customers are on their second contract in this area, or expecting to renew between 2008 and 2010. There is widespread interest among customers in taking advantage of cost savings from increasing remote management of device estates, access to self-help portals and the use of lower-cost, off-site support staffing and help desks.

This makes interesting reading alongside an observation by Gartner analyst Ed Thompson at yesterday's Gartner CRM conference in London that increased demand for self-help portals is a classic hallmark of a serious economic downturn.

During such times, said Thompson, organisations cannot afford to experiment with new technologies and business models and tend to focus on cutting costs rather than pursuing new business.

By 2012, EUWS revenues will move from a managed service installed base dominated by traditional offerings to an installed base dominated by remotely managed offerings, said the NelsonHall research.

Movement to remote management within existing contracts is unlikely to occur until those contracts are ready for renewal.

The European market is slightly ahead in the adoption curve for remotely managed EUWS because some key local vendors such as Getronics, Siemens, and Fujitsu Services have been active with more advanced service offerings for longer than the large global providers that dominate the American market.

The research also found that green IT audits and advice will become a standard component of EUWS offerings as increasing numbers of organizations wish to market themselves as environmentally aware.

This is a challenge for many providers, said Ring. "Many vendors currently lack a green IT advisory service within their EUWS portfolio," warned Ring, "and yet this will become an increasing buy-side requirement. Particularly as the ability to offer green IT audits and advice for EUWS clients will also assist organizations looking to adopt low cost thin-client solutions."